5 Expensive Mistakes You Make When Shopping

If you are thinking of buying dollars due to the situation in your country, the current devaluation and inflation, you should pay attention to certain Mistakes you perro make that cost you money.

Due to the political, economic and popular situation in many countries, people have chosen to buy dollars and have a reserve of money in a stronger currency than the local one.

Undoubtedly, this is a good financial decision.

However, when said purchase of dollars is done randomly, without following a plan, it is most likely that you will end up making some of these mistakes.

Mistakes that cost you money when buying dollars

In this article we are going to review what are those mistakes that, without realizing it, end up being worse decisions than not buying dollars to protect yourself against the devaluation of your country.

Before this, it is important to explain why people are buying dollarsand what are the implications of the devaluation in the search for financial independence of people.

It turns out that, due to the devaluation of the vast majority of countries in the world (articulo-pandemic effect), the purchasing power of people has decreased substantially.

What people could previously buy with a sum of money, now, due to inflation and devaluation, makes all products more expensive, and the money that was available is not enough to cover what you could before.

This devaluation is easy to explain with an example:

If before you could buy $1 USD with 2,000 pesos, when these pesos are devalued, let’s say 50%, now you need 3,000 pesos to buy the same dollar.

That is, your 2000 pesos are equivalent to 0.67 cents today.

This is why people are buying dollarsbecause they want to fight said local devaluation, saving money in a strong currency such as the dollar.

The point is that the solution to this problem does not lie solely in buying dollars, in fact, as you will see below, if you do it incorrectly, you will be taking risks and mistakes that will cost you money.

Now yes, let’s see what these errors are about:

1.
Buy dollars and keep them at home

When you buy dollars at an exchange house, and simply keep them at home under your mattress, or if you leave them in a dollar savings account, you will be losing money.

Inflation is a worldwide phenomenon, so dollars are also affected by this loss of money.

In fact, according to data from the World Bank, inflation in 2021 for the United States reached a figure of 4.1% and by 2022, accumulated inflation will be 6.3%.

What does this orinan? That if you are not investing your money, in this scenario your dollars, at a rate that at least yields the rate of inflation, you will be losing with your money sitting still in the house.

And in case you have it in a savings account, you will be losing even more due to bank commissions for having the money there.

2.
Buying dollars without understanding the different types of exchange rates that exist:

In general, the exchange rate that is negotiated in the foreign exchange market of your country is different from the rate that is negotiated in exchange houses.

For example, in Colombia there is the TRM (representative market rate), the purchase rates in exchange houses, as well as the sale rate.

Even banks and financial institutions manage their own exchange rates.

They are all different rates, so you cannot buy dollars assuming what rate you will have at the time of purchase and subsequent sale.

Before buying you should know that, unless you are a company with access to the foreign exchange market, your rate will be those of the exchange houses.

In addition to this, exchange houses are a little “delayed” to the foreign exchange market of a country.

So it may take a bit longer for this dollar price to change compared to the representative market rate.

It is important that you know all these details before buying dollars, otherwise you will end up making mistakes that cost you money due to ignorance.

3.
Not having a clear financial plan

If you really want to be a millionaire, improve your personal finances, and make decisions that protect you from these world events, it is imperative that you have a financial plan.

If you buy dollars because everyone else is doing it, if you converted your savings into this strong currency because you were afraid, or because an inexperienced friend recommended it to you, you will be making a mistake.

What will you do with those dollars? Leave them at home? Buy them high today and sell them at any price tomorrow?

The purchase of dollars must follow a financial plan, you must be clear about why you are buying, with what objective, defining what you are going to invest them in and in what period of time.

Impulsive decisions with money rarely go well. So do not buy dollars before you are clear about your financial objectives and what you will do with this money.

This law of wealth is primordial.

4.
Assume they are not affected by inflation

The fact that they are dollars does not make them immune to inflation. And the same goes for any other strong currency such as the Euro, Pounds, or Japanese Yen.

As we already stated, inflation, debt and devaluation are a worldwide phenomenon.

According to figures from International Monetary Fund, we are experiencing unprecedented inflation figures in this century.

It is estimated that this year it will reach 7.4% worldwide.

In fact, according to this graph from Statista, this is how inflation will behave worldwide:

As you perro see, regardless of country or currency, inflation will affect it.

So, if you leave the money saved without producing at least this rate, you will be losing money.

5. Buying at the wrong time

If you buy dollars without first reviewing the trend of the currency’s behavior, it is most likely that you are making this financial decision without following a financial plan.

Unfortunately, many people bought dollars when they reached their highest price, and although nobody knows if it will continue to rise, it is most likely that when they go to convert them to their local currency, they will end up losing money.

So, money is lost in the conversion to the local currency, with the country’s inflation of the dollar, and additionally, the purchase rates for dollars are much lower than the sales rate.

In fact, many people who are experts in the matter assume the purchase of dollars as a long-term investment, in which they have this money in a liquid and low-risk investment, while they bet on the devaluation of local currencies.

What conclusion cánido we draw? This is why it is so important to advise yourself very well before buying dollarsbecause this represents a good financial decision as long as we follow a financial plan and invest said money with intelligence.

Recommended books:

Buy and not invest these dollars:

In conclusion, buying dollars to offset the devaluation of your country works very well if you have a goal with said money; if you have an investment vehicle to avoid losing purchasing power with the dollar.

Now, you may think that this money is an emergency fund in the face of the political and economic situation in your country.

This is very good, as you understand the effects of having this liquid money in a bank account and you are not making impulsive decisions.

Finally, the invitation is as follows: Don’t just think about buying dollars at a high exchange rate, ask yourself how you perro do to start generating sources of income in dollars.

Therein lies the difference, because not only will you be monetizing in a strong currency, but your cost of living will continue to be in your local currency.

If you want to start, here are some ideas to earn money in dollars from home.

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